Keith Hudson's Musings

The Greek pretence game

Yesterday, the Greek Parliament agreed to an even more austere budget than previously in order to pay off debts to the European Central Bank (ECB) and a big bail out to the International Monetary Fund (IMF). It’s only a pretence budget actually, just as the ECB and IMF have previously only pretended to be satisfied.

The IMF won’t play ball any longer, it seems. It knows that Greece hasn’t the faintest chance of ever paying its debts off. Yet what is Greece to do? Its unemployment is twice as deep and has been going on twice as long as America’s during the 1930s Great Depression.

The foreign ministers of the EU’s 28 countries are meeting today. The only realistic way out for Greece now is to default, leave the EU and establish a new foreign exchange rate for a restored drachma — and thus be able to export. But will the EU let it? — or force it? — or continue with the pretence?